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Masen’s NOOR solar energy projects

The NOOR PV I program, comprising three separate photovoltaic (PV) projects at different locations in Morocco, is the third round of procurement in Morocco’s Solar Plan. As the tender process for the NOOR PV I program reaches the evaluation stage, we set out below a brief overview of the significant achievements of Morocco’s Solar Plan1 and some of the unique features of these projects.

The Solar Plan aims to install a minimum of 2000 MW of solar energy (both concentrated solar power (CSP) and PV) by 2020. It is being implemented by the Moroccan Agency for Solar Energy (Masen), through international tenders for independent power projects (IPPs), structured on a build, own, operate and transfer basis. Masen started work in 2010 and has lost no time in seeking to reach this target.

The first stage of Morocco’s Solar Plan and the first of the NOOR Ouarzazate CSP projects, NOORo I2 (a 150 MW parabolic trough project with 3 hours of energy storage), started exporting power early this year.

The second phase of the Solar Plan comprises of two CSP projects, procured concurrently:

Seven applicants pre-qualified for the Request for Proposal (RFP) for this second phase. Bidders were given the option of submitting separate bids for each project and/or a combined bid for both, with a level of integration aimed at producing a more competitive tariff for both projects.

The consortium led by International Company for Water and Power Projects (ACWA), with Sener Grupo de Ingeniería (SENER) was announced as successful bidder for both projects on 9 January 2015, with a winning combined bid. The tariffs are among the lowest for thermal solar projects worldwide (around US$0.15 per kWh for NOORo II and US$0.16 per kWh for NOORo III). 1

Masen signed the project and finance contracts with the ACWA led Consortium between 10 March 2015 and 10 May 2015 and achieved financial close for both the NOORo II and NOORo III projects on 18 May 2015. Construction has begun on the two projects and the anticipated commercial operation date for both is 2017. A consortium of Sener and SEPCOIII will construct the plants. NOMAC Maroc, an affiliate of ACWA, has been appointed as operator.

The structure of the projects is illustrated in the following simplified diagram:

Our role on the projects

Our international team advised Masen on all aspects of these three CSP projects, including:

drafting the RFP tender documentation and supporting Masen through the tender process

evaluating the bids and negotiating with the Bidders

working closely with the wider team of advisers including EY, JLT and Lahmeyer

negotiating with international finance institutions on the financing provided to Masen

finalising the project and financing documents.

The work involved coordination between our London, Paris and Casablanca offices in particular, with input from our Beijing and Bahrain offices. The multi-disciplinary team advised on the corporate, finance, security and project documentation, and provided Moroccan and English law advice.

In order to meet the ambitious timetable set out for the Projects, Masen chose to present the RFP in two stages. Bidders had an opportunity to provide technical feedback during the first stage. The full suite of finance and PPA documents were then included in the second stage and Bidders were required to commit to these forms of agreement, as well as submit the full terms of their construction and operation and maintenance agreements.

Masen’s aim was to avoid protracted negotiations following appointment of the preferred bidder and this level of preparation in the tender stage allowed financial close to occur within two months of signing the power purchase agreements for these large and complex projects.

What makes the NOOR projects unique

The unique features of these projects, and of the Solar Plan, underline why Morocco has been so successful in procuring competitively priced solar energy.

The NOORo CSP projects have achieved very competitive tariffs, in most part due to the project structure adopted by Masen. For these projects, Masen has taken on the role of lender, raising the debt financing itself from a group of International Finance Institutions (IFIs), including AfDB, the Clean Technology Fund, EIB, IBRD, and KfW. The IFIs benefit from a guarantee granted by the Kingdom of Morocco. Masen acts as sole lender to the project companies, packaging this debt and on-lending it on preferential terms. As a governmentowned entity, Masen is able to achieve far better pricing than a special purpose project company and the cost of debt is therefore lower than would otherwise be the case.

Masen is a stakeholder in the NOOR projects several times over. It is the procurer of the IPPs, the offtaker of the electricity, the senior lender and, through its subsidiary, Masen Capital, a 25% shareholder in each project company as well as each O&M company. Masen also provides the site and associated infrastructure and services.

The reason for the many roles of Masen is not just to achieve best value for money for the Moroccan public, but also to ensure that Morocco benefits in the long term from the knowledge and skills developed through the construction and operation of the NOOR projects, and protect and advance Moroccan interest in the projects and in the solar energy industry in general.

Next steps

Final bids have now been received for NOOR PV I, and the three PV projects are set to reach financial close by the end of the year.

Masen has started the procurement process for the next stage of the Solar Plan – NOOR Midelt, which will utilise hybrid technology, combining PV with CSP and storage in one or more 400 MW plants.

Given the speed and scale of development of the Solar Plan, Morocco Masen can rightfully be considered a leading player in the solar energy business. Looking to the future, the interesting question is whether other countries in the MENA region can replicate this success.